S Korea unlikely to export spot ethylene in January, February

05 January 2010 09:34[Source: ICIS news]

SINGAPORE (ICIS news)--South Korea is unlikely to export any spot ethylene in January and February due to upcoming turnarounds and strong demand from the country's downstream market, traders and producers said on Tuesday.

"We will only look to fulfil our contract commitments in January and February, because supplies are very tight in ?xml:namespace>Korea right now," a South Korea-based cracker operator said.

Market players said that a planned shutdown at South Korea’s largest ethylene producer was among the key factors causing the supply tightness.

Industry sources said LG Chem planned to shut its 900,000 tonne/year cracker for a month in March and had already started to restrict export sales to build up its inventory levels.

Other producers were expected to step in and make up for the resulting supply shortfall in the domestic market, sources said.

Industry sources said downstream demand, particularly from the polyethylene (PE) sectors, was strong and diverted ethylene away from the South Korean export market.

Another cracker operator in South Korea said: "The FOB (free on board) Korea market is very tight at the moment, as producers have to supply to their downstream clients in the domestic market. At the very earliest, we might only look at spot exports in late February."

Producers pegged offers for spot material at $1,250-1,300/tonne (€863-897/tonne) FOB Korea. Prices were last assessed at $1,120-1,140/tonne FOB Korea in mid-December, according to global chemical market intelligence service ICIS pricing.